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New pp article

Posted: Mon Dec 02, 2019 4:22 pm
by mathjak107
I know you all like articles on the pp ...here is a brand new one from dec 1 2019

https://humbledollar.com/2019/12/imagining-worst/

Re: New pp article

Posted: Mon Dec 02, 2019 5:23 pm
by dualstow
Thanks!

Re: New pp article

Posted: Mon Dec 02, 2019 8:46 pm
by Cortopassi
"In 2008, when the U.S. stock market lost 37%, the permanent portfolio gave up less than 1%."

If I was in it in 2008, I wouldn't have sold out at the worst possible time.

It would have been perfect for me. Too bad I found it so late!

Re: New pp article

Posted: Tue Dec 03, 2019 3:15 am
by mathjak107
the problem is data shows that more conservative people seem to just have lower panic points too ...

typically the conservative investor is conservative because they lack pucker factor when they see things fall . it is likely that any pretty conservative investor seeing the stock investment fall off a cliff would have likely sold the asset causing the pain anyway .

when you look at morningstars small investor data the staying power in volatile times is no better in conservative funds then 100% equity funds .

mentally we are programmed to hate losing money to the point the brain makes us do irrational things no matter how much we plan hypothetically in advance .

Re: New pp article

Posted: Tue Dec 03, 2019 8:01 am
by Cortopassi
My issue was always too aggressive placing the bet on the stock/options (too much $$ as a percentage of total investable), and did not get out early when the bet when the wrong way.

I think I mentioned I did an analysis years ago on all my trades, that if I would have had a 8% stop loss order in place on everything I ever bought to clamp losses my net worth would be a lot more today.

But instead of doing that, my strategy at many times was to average down. And again. And then give up and take a much larger loss, or to wait for it to get back to break even and then get out, only to watch it continue to rise.

No matter which direction, I perpetually failed because of my emotions and lack of strategy. I'm sure I could do a lot better now, but I have no interest anymore in recreating those stresses.

I am the perfect individual Harry Browne was targeting.

Re: New pp article

Posted: Tue Dec 03, 2019 8:59 am
by mathjak107
if it works for you then it works ....

with all this chaos our leader creates i am enjoying the pp as well .... i have no faith in the leadership so i am running the most conservative ever at this point ... i have multiple 6 figures in gains this year and i am not about to let tweets and chaos evaporate them .

Re: New pp article

Posted: Wed Dec 04, 2019 10:53 am
by Tyler
mathjak107 wrote:
Tue Dec 03, 2019 3:15 am
the problem is data shows that more conservative people seem to just have lower panic points too ...

typically the conservative investor is conservative because they lack pucker factor when they see things fall . it is likely that any pretty conservative investor seeing the stock investment fall off a cliff would have likely sold the asset causing the pain anyway .

when you look at morningstars small investor data the staying power in volatile times is no better in conservative funds then 100% equity funds .

mentally we are programmed to hate losing money to the point the brain makes us do irrational things no matter how much we plan hypothetically in advance .
That's a really interesting insight.

I believe it's very important for people to find a portfolio that matches their personality and volatility tolerance, or they're pretty much doomed to failure. But even those that succeed at that step can still fail if they don't learn how to deal with whatever volatility they signed up for. I think a lot of it comes down to being comfortable with some level of uncertainty. Even for patient, logical people that's a difficult concept to grasp.

Re: New pp article

Posted: Wed Dec 04, 2019 11:43 am
by mathjak107
The problem becomes we only know our pucker factor in actual combat ... we never know until we are in that slide down what poor behavior we will exhibit after the fact we choose an allocation

Re: New pp article

Posted: Wed Dec 04, 2019 11:59 am
by Cortopassi
mathjak107 wrote:
Wed Dec 04, 2019 11:43 am
The problem becomes we only know our pucker factor in actual combat ... we never know until we are in that slide down what poor behavior we will exhibit after the fact we choose an allocation
And that pucker threshold changes with age, kids, and amount of net worth.

Re: New pp article

Posted: Wed Dec 04, 2019 12:22 pm
by mathjak107
Does it ever ...... I had balls of steel at one time ...being retired; now capital preservation of all those gains from this bull is my priority ... I run about 35-40% equities at times ..especially when I use the pp like now ..

Re: New pp article

Posted: Wed Dec 04, 2019 3:49 pm
by flyingpylon
IMO, the PP requires a certain level of abstraction requiring the investor to focus on the big picture instead of the individual assets. A lot of people simply are not comfortable with abstraction. That's a different issue than the typical conservative vs aggressive investor comparisons.

Re: New pp article

Posted: Wed Dec 04, 2019 4:38 pm
by mathjak107
As they say you don’t want to see how the sausage is made. But non the less when the ingredients are displayed in front of you it is hard not to see the components...

In the book your money your brain , modern brain imaging equipment was used to scan investors both under hypothetical and then actual situations where money was invested and at risk .

Hypothetical situations had very logical decisions made with different parts of the brain ....but under real loss potential with real dollars involved a totally different part of the brain lit up and that part was associated with the most vial stimulus ...watching videos of people vomiting ,smelling dog poop , a druggie needing a fix , all brought the same illogical part of the brain in to play ...

The brain found just the thought of being down or losing money was horrible and caused bad investor behavior .

The funny thing was that once you were down the brain relaxed and brought back the logical side ...the book was written Jason zweig the son of Wall Street week Marty zweig